Genesis Lease in talks about potential merger

SHANNON-BASED aircraft less or firm, Genesis Lease has confirmed it is in merger talks with a firmbelieved to be AerCap Holdings.

Following what it called unusual trading in its stock and marketplace rumours, Genesis confirmed it isin discussions with an unnamed party about a potential merger.

Airfinance Journal reported that the company Genesis is in talks with is AerCap Holdings. Genesis owns 54 aircraft valued at about $1.6 billion (€1.1bn).

Genesis was formed in December 2006, when it sold shares to the public and then purchased 41 aircraft from General Electric, the world’s biggest aircraft lessor by number of planes.

Marybeth Csaby, of KCSA Strategic Communications, an outside spokeswoman for Genesis, declined to comment beyond the statement.

AerCap spokesman Frauke Oberdieck declined to comment on the Airfinance Journal report as did Dan Whitney, a GE spokesman.

Genesis acquires and leases passenger and cargo jet aircraft to airlines around the world. It reported an 18% increase in profit in the second quarter of 2009 to $169.8 million.

Meanwhile, in a report yesterday Davy Stockbrokers said the period ahead is crucial for European airlines as we leave the mainly leisure-driven summer months.

It said the industry remains very cyclical but it expects a slow recovery of traffic growth from here. However, it did say that there would be yield weakness for theremainder of the year, driven primarily by the structural decline in premium traffic.

“The considerable risks for the industry remain, including overcapacity, oil prices and economic and geopolitical uncertainty.

“SARS and foot-and-mouth disease both engendered short-term negative share price reactions, but we do not expect the ‘swine flu’ pandemic to have a material influence on prices,” it said.

Overall, Davy has changed its negative view on the sector to a more positive one.

“We are in the very early stages of a recovery, even if it will be slow, not linear and dependent on restructuring,” it said.

Also yesterday the International Air Transport Association said the world’s airlines are expected to post losses totalling $11bn this year as weak passenger traffic and cargo demand pressure revenue.

The association previously projected losses of $9bn due to rising fuel prices and weak revenue.

Industry-wide losses of $3.8bn were forecast for 2010.